Business News England - 20.09.2021

New health and social care Levy to be introduced across the UK to provide extra cash to reform the Health and Social care systems in England.

The Prime Minister Boris Johnson announced last Tuesday that the proposed increases in National Insurance Contributions and dividend tax would raise £36bn for frontline services in the next three years and be the "biggest catch-up programme in the history of the NHS". He accepted the tax and NIC increases broke a manifesto pledge, but said the global pandemic was in no one's manifesto.

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The Prime Minister is thus standing by his statement on entering Downing Street that the Government would address the funding needs of the Social Care system and will adopt many of the measures originally proposed in the Dilnot Commission Report back in 2011.

The can has been metaphorically kicked down the road by previous Governments but the current Government plans to address the issue. Currently, anyone in England with assets over £23,250 must pay for their care in full resulting in many families having to sell the family home to pay care fees. The proposals announced by the Prime Minister will limit the amount that anyone in England will need to spend on their personal care in their lifetime to £86,000 from October 2023.

Also from October 2023, anyone with assets of less than £20,000 will not have to make any contribution for their care from their savings or the value of their home, ensuring those with the least are protected. Anyone with assets of between £20,000 and £100,000 will be eligible for some means-tested support, helping people without substantial assets.

Those above State Pension Age who are earning or self-employed will start paying NIC and the new Health and Social Care Levy from 2023/24.

Proposed NIC and Dividend Tax Rates

It is proposed that there will be a 1.25% rise in National Insurance Contributions (NICs) from April 2022 paid by both employers and workers and will then become a separate tax on earned income from 2023 - calculated in the same way as NIC and appearing on an employee's payslip. Note that the 1.25% increase applies to the Class 4 contributions paid by the self-employed on their profits as well as the Class 1 contributions paid by employees increasing the rates to 10.25% and 13.25%. The employers Class 1 rate will increase from 12.8% to 14.05% however many small businesses are able to set off a £4,000 employment allowance against their employers NIC liability.

Many workers operating through personal service companies to whom the new “off-payroll” working rules apply will also be caught by the proposed measures.

The 1.25% additional levy doesn’t just apply to national insurance contributions, it is proposed that the income from share dividends, earned by those who own shares in companies, will also see a 1.25% tax increase. This would mean that after the £2,000 tax free dividend allowance the rate of tax would be 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35% for those with income in excess of £150,000 a year.

Details of the proposals are set out in the following document: 6.7688_CO_Command paper cover_060921 (publishing.service.gov.uk)

Autumn Budget set for 27 October

The government has confirmed on 7th September that a full Spending Review (SR) will be held alongside the Budget on 27 October, and published its overall spending ‘envelope’ – the total pot of money to be allocated between departments at the SR. These new spending plans cover 2022/23, 2023/24 and 2024/25 and represent a return to multi-year budgeting which have proved impossible during the pandemic.

See: An initial response to the Prime Minister’s announcement on health, social care and National Insurance - Institute For Fiscal Studies - IFS

UK Economy latest

The office for National Statistics (ONS) has released its latest analysis of growth for the production, services and construction industries in the UK economy between February 2020 and July 2021, highlighting the impact of the coronavirus (COVID-19) pandemic.

The easing of all coronavirus (COVID-19) restrictions in England on July 19 contributed to monthly gross domestic product (GDP) growing by 0.1% between June 2021 and July 2021; however, GDP remained 2.1% below its level in February 2020, which was the most recent month not significantly affected by the coronavirus pandemic.

The July 2021 growth in GDP was led by a month-on-month rise of 1.2% in production, although this sector remained 2.1% below its February 2020 level; the rise was led by the mining and quarrying sector (contributing 0.16 percentage points of positive growth to GDP), with the extraction of crude petroleum and natural gas industry growing by 28.0%.

See: Coronavirus and the impact on output in the UK economy - Office for National Statistics (ons.gov.uk)

Audience of the Future funding for early-stage projects

Apply for a share of up to £800,000 for early-stage, human-centred design projects in creative or immersive experiences. Innovate UK, as part of UK Research and Innovation, will invest up to £800,000 to fund early-stage, human-centred design projects through the Audience of the Future Challenge Fund. The aim of this competition is to support early-stage projects to generate ideas that meet customer needs, using research and human-centred design principles. Fast, low-cost prototyping and user testing of those ideas is also within scope.

Your proposal must deliver well-defined, user-validated ideas ready for further technical research and development (R&D) and discover insights about the problem space, consumer motivations and behaviours.

Projects must explore innovation opportunities in one or more of the following themes:

  • designing for Net Zero
  • design for Build Back Better
  • design for Cross Sector Immersive Projects

Projects must include activities or work packages that:

  • discover customer perceptions, motivations, and behaviour
  • define the problem statement and pinpoint the characteristics necessary to make any solution desirable and fit for purpose
  • deliver clearly communicated ideas that have been validated through fast, low-cost prototyping and user-testing and are ready for further technical R&D

The competition is open to single applicants and collaborations for projects with total eligible costs between £25,000 and £50,000. To lead a project, your organisation must be a UK registered business of any size. You must involve at least one micro, small or medium-sized enterprise (SME).

See: Competition overview - Audience of the Future – Design Foundations 2 - Innovation Funding Service (apply-for-innovation-funding.service.gov.uk)

Red Diesel Replacement competition

The Red Diesel Replacement competition aims to accelerate the commercialisation of low carbon red diesel alternatives. The £40 million Red Diesel Replacement competition aims to support the development and demonstration of low carbon fuel and system alternatives to red diesel for the construction, and mining and quarrying sectors. The competition will support the decarbonisation of these high-impact sectors that will be affected by the partial removal of the entitlement to use red diesel and rebated fuels from April 2022. The competition is being run by the Department for Business, Energy & Industrial Strategy, and is part of the £1 billion Net Zero Innovation Portfolio.

The purpose of the expression of interest is to raise early awareness of the competition and to gauge the level of interest. You can express your interest by following the steps below.

See: Red Diesel Replacement competition: scope of the call - GOV.UK (www.gov.uk)

Gender Pay Gap – Reporting deadline for larger employers approaching

The extended deadline for reporting Gender Pay Gap data is approaching, with all companies with over 250 employees required to report their data by 4 October 2021.

The Equality and Human Rights Commission provide a guide on doing an equal pay audit for larger organisations. The guide provides a step-by-step approach and useful templates to do an equal pay audit. It is designed to make it easy for larger businesses to examine their pay systems and decrease the risk of an equal pay claim.

An equal pay audit compares the pay of men and women doing equal work in your organisation to:

  • identify any differences in pay between men and women doing equal work
  • investigate the causes of any differences in pay between men and women doing equal work
  • eliminate instances of unequal pay that cannot be justified

Doing an audit demonstrates your commitment as an employer to remove unfair pay practices.

See: Equal pay audit for larger organisations | Equality and Human Rights Commission (equalityhumanrights.com)

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